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Five cheap small-cap growth plays

The effect of the pandemic on companies' earnings has made life challenging for my Genuine Value Small Cap screen, but it is still digging up some interesting ideas
Five cheap small-cap growth plays
  • The screen underperformed its benchmark over the past 12 months but still delivered a 34 per cent total return
  • Over the eight years since launch the cumulative total return stands at 170 per cent versus 110 per cent
  • 5 new Genuine Value Small Cap plays for the coming year

Last year, when I ran my Genuine Value Small Cap screen I did so with a “health warning” attached. The fact was that the extraordinary circumstances caused by the pandemic were making a key input unreliable. The input in question was brokers’ growth forecasts.

Despite the health warning, I also suggested the screen still had value in generating ideas, but the ideas needed to be approached with caution and in the context of the peculiar circumstances. As it happens, this seems to broadly have proved the case. While the screen on aggregate did not keep up with the small-cap rally over the past 12 months, it did produce strong numbers and very high returns from some individual shares.

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